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tv   Countdown  BLOOMBERG  August 12, 2015 1:00am-3:01am EDT

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caroline: it is 7:16 in london. 8:16 in frankfurt. guy: china has reduced its daily fix on the u.n.. >> the human drops further as chinese central banks give the .- on the yuan markets more say. thenvestors seek safety in this comes as the people's bank of china falling through on its promise to give the people more dollar. >> we will bring you retail say. sales out of china. stockse: emerging-market we look ahead to alibaba. end in a bear market. concerns that china will curtail imports. the selloff took the emerging market index from a peak last good morning. you are watching countdown. september to a 20% fall. devaluationeen more that is the threshold for a bear market. company -- one we're seeing the repercussions through the emerging markets. of its two french factories put
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in more hours. elliott will beginning us an update on what we are seeing. it will take operations elsewhere if no agreement is this is deval 2.0. reached. caroline: let's return to china. you can see what is happening. let's get back to our top story. the dollar strengthening. here is what our guest has been telling us about the yuan's he seems to be the safety trade around the world. continued plunge. >> week exports were part of the a really sharp pickup in the currency for a second day. reason. the central bank would never admit it. i don't think this is the only we have got the second-biggest amount we have seen in two decades. reason. i think the and imf -- i think the imf factor is important. market.to feed the china wants to get this in the basket. go off schools that market will have a bigger say in setting the rate. have removed. i want to give historical >> they can take this currency context. wherever they want. they claim it is a one-off. i doubt it. today we are going to get that it is not a quested it's that opportunity. let me show you this chart. this was taken on the heels of sharply declining exports and that is the asian financial continued downward pressure in chinese growth. >> china is an eight masses --
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crisis. china is at eight massive this is where we are right now. disadvantage. it gives you a sense of historical context we are dealing with their. this is not something to worry about. >> these are the economies that it is not something to say are most exposed. they're going backwards. , south africa treated this is a positive move. >> look the market reaction. it is a risk off move. you have interest rates on the as its biggest trading partner. back of the yield curve. >> it was great when china was it is a testament to some concern about the global growth ahead. picture. .antastic china coming after the export data, making a move on the this is good news. today, not so much. currency. the initial concern is what is look at what is going on it saying about global growth? in the aging -- asian trading section. what is going on? confusion.a lot of a few things to watch for australia, new zealand. confusion could have been rocked chinese demand right on the out -- brought out. margin. even 5%. euros, rest, the dollars they normally give their press statement in chinese. it came out in english. one thing i would watch is it was unusual. reserved outflows.
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you would get a bid for dollars. this is indeed what happened. at the same time, china will this is the market for the have to sell treasuries as well. onshore. >> china has joined the global treasure -- the global treasury. this is the debt that is fixed by the authorities in beijing. that was the move yesterday. is going tohina the dollar up for a second day. devalue 1%. let's take a look at what is will have to suffer the happening in the offshore. cuts once, because german more pronounced. exports to china is 3% of german gdp. 2.8%. david woo joining us there. another 2.2% down. let's have a look at the story caroline: with us is colin perspective. mclean, managing director of this is a two-year chart. asset management. there we go. also joining us is david page. this is the best biggest movie david, give us the repercussions we have seen in 20 years. of china. were you surprised by the china? it is affecting all sorts of policy.ing it is a good other currencies as well. the australian dollar. it is down. let's wait for it. david call when you look at -- david: when you look in the
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that is a sort of line in the thatr, you have an economy sand. we are getting back to the big has seen a 14% increase in its story. exchange rate. not where the economy is lengthening. why have they done it? quite the reverse. is this the first move to a people have been pushing through free-floating currency? monetary policy. dictating where this try to stabilize the economy. currency goes rather than the the currency is moving in the opposite direction. athink what you're saying is bank. that is what we have at the moment. realignment. equities are feeling this. how much further does we have one more for you as depreciation going to come well. through? china has chances to limit that go.e we depreciation. concerns about sparking capital flight. here.n entering the fray issues like china might not want to see its currency fall back they are coming through. much further. plus or -2%. of notoving into a realm knowing quite the extent of depreciation. xpecting that these today's -- on.e the currency wars are
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guy: with screen do you think get have been trying to mark carney is going to have up into this basket of reserve , the pboc orer currencies around the world. what is happening with the imf coming out and saying there employment numbers? are cautiously welcoming these is theree big picture market oriented you on fixing -- hasing at -- the economy yuan fixing. shortly after we saw the montreal policy accommodation. they were talking it's time to remove some of that. about major economic indicators stabilizing and showing good -- we've been saying early next signs for what they are calling a stable currency. year for some time. it pointed to the fact that i think the difficulty that we might see is if we see energy china had a trade surplus. prices or a significant they don't point to how that may , theniation from the yuan well be eroded in the future. they want tong that pushes lower the inflation price for early next year. that might cause some discourse. support the local economy. pboc. push the that is what we have at the moment.
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i think that is a fine-tuned unmoved.similarly decision. that is what we have. the key is the bank is near the cusp. where does this leave back to you in london? guy: thanks very much. the british parliament? we've seen the dollar strength -- pound strength here it the weaker yuan has strength. where do we see the pound going been seeing stocks stumble. everything carney is good to is ite just hearing push back? it is done the heavy really that people's bank of china china jet more market? lifting for the u.k. in terms of every time a -- governor carney talks about raising rates, we see a stronger bounce. just trying to inject more into the market? we see a cooling off of trying to kill two birds with inflationary pressures. a strong pound helps the bank of england. one stone. they have not referred to the pound very much in their it has been struggling. projections. i don't think they are this has helped a really uncomfortable. guy: wage growth comes through. important sector of the economy. hand, it wants to it has slowed down. they are a little softer.
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there are likely to pick up again. join. if we have really low inflation it would be helped if it makes and quite strong wage growth, it more market based. does one counter the other one out? it is certainly taking a step in that direction. david: what the bank of england felt is what -- is not what how much are they willing to inflation is going to do. tolerate the market? their best guess of what -- guy: how far will they let this their best guess of where inflation is going to be. go on for us to happens domestic inflation is tomorrow? they said there is no doing. economic or financial basis for the currency to continuously what is driving that is labor cost. part of that is wage growth. what they are suggesting is we decline. might be going through ape it seems there are a lot of underlying and the mental's that period of adjustment. should support stability. productivity growth could be picking up. that is a key unknown. at the same time, we are in if theed territory we get some of that information from labor coming through today. market really will be it asks the bigger question. determining the yuan value.
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it is a mild adjustment. markets themselves are very .ervous much -- what a sharp depreciation of the yuan would do. potentially a vicious cycle. caroline: we will wait and see. even a large depreciation -- think you very much indeed. the currency saying it will guy: an incredible negative. colin: it is been 2% for two fall continuously. years. it is worth repeating. we've always had the best guess of its target rate. it is something to think about over the next few days. david: that's why the bank is searching more not on the gdp get chinese retail sales. numbers but what the fundamental all of those numbers are coming up. drive is about. we will bring them to you as the that's why they're concerned if show progresses. you do see wage inflation come stockse: emerging market through, that is signaling something further down the line. they are cautious themselves. are now entering a bear market. the lack ofat about so many of these countries color adjustment in the u.k. economy?
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we are very focused on services. as the number one trading one thing to talk up his partner. manufacturing. does. david: not at all. there are a number of issues. potentially be seen as even if you look back where a liability. manufacturing was doing better. the u.k. was still struggling a bit. also in terms of commodities as energy costs were high. , if you are an asian were a lot of structural issues. let's not forget the u.k. -- emerging market that exports, levels that is at the highest in your express just got more six years. expensive. there is a lot of structural chinese consumers will be adjustment the need to come through. if we start to see fast consuming less. productivity come through, it if you're exporting around the would cause the competitiveness world, chinese exports are more to come through. at the moment, the tentative signs are coming through guy: competitive. here it guy: are we talking guy: are werst -- the export to china and around the world. life got tougher still. talking about the first rate hike?
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david: there is an element of that. how quickly the economy can that just because china is withstand changes? expected to consume less, but how much fiscal adjustment in decliningrms of the the u.k. can cope with. we look in emerging market currencies. to that with regards -- in the u.k. we need to think about how much change year on year we can we are seeing oil declining. get from monetary policy. guy: thank you. if of index down by 1% ♪ yesterday. down by two percentage yesterday. they are -- they're all big in commodities export. there talking about how it will suffer. there have a lot of debts in dollar. they could be much harder for those companies to pay those. guy: that affected the emerging markets. which is the bigger problem?
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the fed raising rates which will send the dollar higher? that chinese? are they changing the mix even more. you have got to ingles to look at. to massively important central banks. >> that is why they were kind of suffering to a degree. china -- it is being called into the mix. money is finding its way towards treasury. your assets are in emerging markets current sees. before,re discussing there's always the potential for exports and companies in
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countries that are potentially seeing their countries devalue. they could actually gain. caroline: exporters in china are a winner. and indeed, u.s. treasuries in particular. guy: yup. , the effects of the second evaluation. we look ahead on what it could mean for the u.s. and the fed reserve and that rate hike timeline. china has no respect for president obama whatsoever. whatsoever. you had to take strong action. how do we compete? ♪ i have been saying this for years. they have been doing this for years. this was the largest evaluation they had in two decades. ♪
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they're making it impossible for our businesses, our companies to compete. ♪ think we are run by a bunch of idiots. caroline: we have got the corporate view on the chinese get excited for the 1989 world tour economy . with exclusive behind the scenes footage, and the new ceo. all of taylor swift's music videos, interviews, and more. xfinity is the destination for all things taylor swift. first, why the move could be good for world's growth. yes, you heard me correctly. caroline: going back. that is coming up next on it is 7:30 here in london. "countdown." let's get straight to the top stories. and our twitter question. its fixna has reduced caroline: let us know your thoughts. give us your view. eight on the yuan. comes as theis ♪ peoples bank of china follows onough on his plan determining the exchange rate. stockse: emerging-market
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ended in bear market. concerned that china will can turn -- will curtail after its biggest decline in the yuan in decades. hillary clinton has directed her aides to hand over private e-mail service to the justice department. is asked her aides to give the department her thumb drive, containing copies of her e-mails. caroline: with the yuan tumbling for the second day, let's take a look at what is going on an asian trading sessions. richard, give us the latest on the pboc? there are going to be some winners. generally a down day in asia. attention isyone's on what china would do.
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markets have rebounded a little bit. what china acceded which is weaken the fixing again. the action was to instantaneous. badly affected were southeast asian markets where currencies levelsnged to lowest since 1998, and indonesia and malaysia for instance. hong kong stocks down another 2%. across asia, the index was down 2%, the lowest level since january. the biggest losers were singaporean banks. of the economy there and weakness and it the currency is causing investors to reevaluate their respective
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earnings in these companies. a very bearish day. saw that the pboc intervened, now it is free trading currency a little bit. losses continue there. all eyes are going to be a what china is going to do in the future. caroline: thank you very much. guy: tune in tomorrow to find out. setup of tell you the the european equity market. the bloomberg consolation is here. i've got the dax down sharply at the get-go, 1.2%. ftse has cooled down. exposure to global trade. tickler china, the dax undoubtedly one of the markets
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that will suffer the most. the euro has a nice cheap caroline: welcome back to currency to cope with at the moment. caroline: the euro remains "countdown." relatively weak. here are some of the top stories you need to know. keep rise on the buns as well. guy: china and the daily fixing -- bundsying as well of the yuan. the record correct in the rate. rallying as well. they follow through on their plans to give the market more say in the exchange rate. has -- elliott emerging markets gotkine has the low as well. stocks ended a bear market. elliott: there are some loses out there. and the biggest drop in the yuan -- youle so my thunder in two decades. stole some of my thunder. market.old for a bear chinese airlines, they're going guy: the latest company to try to get a double hit. the -- corporate debt in dallas that is going to be harder to pay off -- corporate debt in dollars that is going to be hard to pay off. yesterday -- 16% yesterday.
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caroline: let's get back to the yuan and china. a second day plunge. makers 15%xury goods of its sales from china. they have been getting killed .vmh, more than a quarter having basically pay their almost 40% of its sales of the currency to the dollar over the last several years. greater china region. all of those companies. the dollar has gone up and up. minors as well, pretty obvious relative to their asian age candidates. diverse -- asian neighbors, they china's currency devaluing is going to make products more have been in a tough spot. >> in some sense, they are extensive. china is going to be consuming less. as a result, those miners -- qe to the extent apple, the ceo talking about the it will drive down rate. belly scratching the surface of china. that should make you feel less china becoming a growth engine. negative. a place for apple to sell of chinabout the start iphones in the first half of the year. qe. sales.ets 60% -- 17% of a china has been a part of they come from the greater china deflationary fear. region.
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they talk about asia-pacific, apple does -- apple takes a hit it is something that really happened last year with the slowdown in china. china contributes to the oil there yesterday. are one of thers story from a demand side. main reasons why china did this. things like lenovo. there is a big supply story. we saw their shares rising yesterday. overall in the month of july, we saw a big increase in deflationary fears. close and toys also benefiting from yesterday desk close and this will only feed into that. guy: right. toys also benefiting from yesterday. that is the view of our guests. argentina did a currency swap with china. bloombergg in a $9 billion worth of yuan on reserve. columnist. he is rather more optimistic. some suggesting they lost out why the optimism? when you look at their 2015, about $150 million. a, thetillas, groom they are having a rough year. exports have stalled. maker of tortillas is down by one quarter. they're trying to avoid meltdowns. in many ways, china needs to u.s. now canceled more of its look to stabilize the economy.
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in recent months they have gotten a lot of grief for tech sales. many premade. to control the stock market. gruma islt, groom a -- here they are to give very valid and logical step. the chinese currency is up about one of the beneficiaries. 15% this year. it was still overvalued. always a pun with their experts are sputtering. elliott. look at this from a global guy: i'm sure he was wincing at context. that. the pronunciation of some of everyone says that it is fine. those manufacturers are quite impressive. they say it is fine. how do you deal with this from it investors that's how you do with this from an investor's point of view? >> is important it is a big problem. not to overreact. stand back a bit, take stock. as an american, i wouldn't have voted for donald trump yesterday, that especially not after those comments. for a guy who knows business, he clearly, there is a lot of pressure on the chinese doesn't get the economics. authorities at the moment. caroline: we'll talk about more they seem to be doing something. in the west, we've always been about that global. suspicious of chinese growth figures. critics say we could see a
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currency war. then all the underlying is it coming? indicators suggest the growth is softer. sure, but japan started this. against that background, we have been anticipating there would be china is responding to that. some policy action. it's not necessarily surprising there certainly that risk. that they have allowed the currency to drift lower. it is the second biggest economy in the world. it's disruptive in asia. it is facing a variety of potential crises. it is potentially disruptive in policy terms and the west. it is becoming a more stable part of the economy. that concerns me a bit more. caroline: taking a step back. it is good for everyone. that is why the end justifies you have not overreacted. 90 start to see this is today's the means here. now used -- now you start to see there's a lot of uncertainty. that is probably my biggest this is today's -- this is two criticism. days. really think you can richard: the chinese are fault the strategy at this point. trying to dresses up. i think china is taking a very do many of us doubt that this is logical appear. ?ore directed the currency again is overvalued still.
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as long as it is done in a very they want to see the yuan depreciate further? we do not know how much. orderly and transparent fashion. guy: it was. what we are looking for is the reaction from other asian >> i'm sorry? economies. this might make it easier for guy: will it work? china to export to the west, but when you look at what they are they are competing with a lot of trying to do, can be achieved like asian manufacturers the objective is maybe getting a pickup in growth where others korea. how is korea going to react? have failed? their economy is finding it will it deliver? tough. >> i think it will to some the world of competitive extent. devaluation is a -- is not a it suggests that officials in pleasant one. that is the risk. beijing will do almost anything we're focusing on asia, it takes to boost the economy, including stomach thing global because that is where the biggest impact seems to be. latin america, especially in condemnation that they are getting today. i think it will work to some south america, that is when extent. the china were looking to china started getting in there devalue its way -- 2% is by a -- of trading partners with brazil, chilly and peru. little bit of time. going tohese economies my hope is that it stabilizes and gives 10 a chance to take a deep breath.
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that is my hope. be impacted by the devaluation we will see. in china echo richard: -- in caroline: thank you very much china? indeed. we will see in the. richard: and people talk about south america, they are going to focus on brazil. -- we will see. >> good morning. they are good to find the world caroline: moore to go. remains in tact. if you happen to be a producer of goods in south america and going. keep on currencies are depreciating and this isu look at you're exporting those goods, then it might be slightly easier. for those economies overall, they're going to find the starting a new currency work, environment extending tough. then definitely. what we are saying in this new economists,rging so.rsonally don't think whether they be manufacturers or . think maybe a 5% or 6% move commodity producers, trying to cope with a world growth environment which is positive, into just precious markets but not as positive as it was prior to the recession. offshore in hong kong. this is creating a change. wasmight remember, there it is a gradual step. it is not a one off obviously. world growth, it was china.
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it is moving away from the u.s. guy: i'm confused. why did in the markets need this this is becoming a traditional economic cycle. it is being driven in the u.s. coming? they know the currency is so over valued. the u.k. has followed, then exportsinly after the europe has followed. guy: given that, when i'm we saw a lot of reserves and looking at the situation, our interest rates cut. dallas assets going to be the best performing assets in the all it is doing is stimulating are dollar assets going domestic demand. is that helping the external picture. to be the best performing assets in the space? we'll have to see some kind of exchange rate policy. -- in terms of performance in the equity market. it is seen the expansion, it now more interference in the currency markets. relies on bottom-line growth. caroline: the imf has if wages start to rise more -- beenthan marches tentatively given this the sums up. margins might come under pressure. currents inome the quite little europe is any more the next couple of years? fable part of the cycle in which 2017, 2018. you can start to see markets
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expand as economic growth comes through. europe is a more interesting it is what everyone is talking about. than the united states. we're seeing that come through this is a great step toward it. in european earnings. when anybody is worried, they do the price action was the main story. the actual liberalization is the tend to trickle towards the dollar. kind of thing they said they caroline: you said you got to wanted out of china. keep your call. are you -- keep your calm. project.anity ideaou leaning towards the that one goes toward the and i think they really gained much from doing it. european stocks at the moment? they took aggressive richard: the question is where were you before hand? we were more exposed to european and western stocks, generally, monetary action to deal with that. with much less exposure to emerging markets. think they will be what i want to change that? thinking maybe we need to take a not at the moment. look at this fun and maybe slow down the rate hike story? .> i don't think so what you have to arrive to is that bond markets are rally in. .- are rallying they are thinking about rate hike at the moment. that doesn't mean to say that bonds are a good value.
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they're willing to look through we have seen hints of what could certain risk at the moment. happen in the bond markets. guy: stay with us. forward.hing is moving stay with us. we will his take on our twitter question. this may delay the september caroline: which is is china rate rise cap a little bit. exporting is problem? i wouldn't be surprised if we saw a slip. indeed we are seeing asian stocks crumble. they don't want to scare the european stocks down in europe. horse it has been warned about we are expecting another down day. about scaring the markets. guy: in terms of data, you can implement data, 9:30 this the dust has even settled from the move yet. what harm is there, you could morning. we are going to take a look very much at the number here it we say. work our way -- at the number. western: does this hurt we are going to work our way port the figure. ♪ economies? think we will see individual companies get hurt by it. i think overall businesswise it won't hurt too much.
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deflation at the moment is proving good for consumers. caroline: thank you very much indeed. great to have you on. guy: we will take a break. see you in a moment. ♪
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guy: it is 7:46 in london. 8:46 in paris. we are 14 minutes away from the
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opening of the european markets. caroline: this follows the record -- by 1.9% yesterday. this comes as the people's bank of china follows on his plan to give the market more sway in the coming exchange rate. currency funds for the second day. guy: emerging-market stocks entering a bear market. concerns that china will curtail caroline: welcome back. 6:30 a.m. in london. we have breaking data from china imports. the selloff includes the . emerging market index. guy: sales rising from a year 20% down. earlier. the threshold for a bear market. caroline: yet dialect is the we have also got home sales data coming through as well. we did see a slight dip in the latest company to try and skirt market. -- the german carmaker once -- it is really reinforcing i think carmaker wants workers to put in once again why they are acting in the way that they are acting. more hours. guy: u.k. unemployment figures the pride month have released later this morning. joining us now with a look at been 6.8% growth.
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clearly the slow down is feeding what we can expect from the data is jenny murray. into the manufacturing over in china and the consumers are richard jeffrey also. hurting. sales are growing as much as how are that's how important are expected. today's figures? jamie: this is what 11.2%. these are still growth figures. it is looking for. they are very important. the key data from the u.k. what you -- isat towardsnot only helping injecting more market that what we should be focused on? it is meant to dip a little bit confidence, but also helping it?n it back up -- isn't exports. guy: they're doing a number of things to get the economy motivated once again. have seen a big move in the currency overnight. ; it has more to do with bonus i think people are expecting payments last year. this to carry out for some time. -- jim eco-it has more to do that is what we were talking about yesterday. with bonus payments last year. pay pressures are in the we'll be see a similar step pipeline. tomorrow? how much do we get? we should expect to see pay growth rise. depends on the data.
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it depends on where the economy richard: the bank of england has will go next. a problem. it's been looking for excuses it seems they are taking not to increase interest rates. multiple action to deal with the issue of the slowing economy. lowerne: they will remain it's been looking over its shoulder. central bank is worldwide is --ll terrified and mistakes . remainingai composite is still terrified by mistakes. at their most worried about in a percentage lower. guy: let's deal with the stories the west is raising rates too early. you need to deal with this they have another excuse to morning. 1.6%. delay this decision. they should be focused on labor market data or domestic the people's bank generated inflation. of china follows through its it is picking up. plan to give the market more say in the exchange rate. you can see the currency diving again. against that back at -- against emerging markets ended that backdrop, they should be enticing. a bear market. they should be tightening. interest rate levels that were set during a crisis.
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this is not a crisis. it had a peek from last should be normalizing. they missed the first boat and september. the risk is what is happening company -- they now in world markets will dissuade them or persuade them not to raise interest rates now. want the workers to put in more you asked me a question. hours. the answer is i don't know. caroline: let's talk more about what is happening at the moment china and europe. makes the risk higher. caroline: jamie, how much does we'll be talking to our next china play in the mark carney guest. process echo -- process? it is despite being viewed as a basket case. jamie: the effect is going we want to talk about the to disappear in a years time. the bank is always looking to deflationary effects happening use ahead. in china overall. -- looking to years ahead. her you surprised about the timing of all of this? was surprising. it takes a year to pass through prices in the u.k. after a years time, that has happened. we do not worry too much about that.
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on growth, we don't have they have all been going down. enormous exposure to exports from china. asian dollar is that a six-year law la -- six-year low. china start to pose guy: is it changing your investment outlook on assets? stability, and it spreads to a it would pose perhaps the bond u.k.. and maybe in the greater risk to the u.k. recovery. worse, -- et guy: why are we expecting global maybe into the second half of next year. inflation to rise? i think there will be more brisco i can think of lots of delays. reasons, but i am extrapolating. i wouldn't be surprised. i wonder where people think caroline: in terms of inflation is going to come from. ramifications or u.s. and u.k. central banks. >> take the u.k. example. you take a look at the index. from economic growth
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perspective, do think the u.k. and you s economy could be hit i a deflation this move in china? -- could be hit by this move in environment. this is a disinflation china? >> the main index would be environment. luxury goods or car down.prices that is because of energy and manufacturers. food. those sort of one's. also sterling has been strong. imports are coming in cheaply. interesting the u.s. there are little inflation being earning currency has been the generated in the goods area. services prices are consistently .iggest one in these updates rising at a rate above the it is more as a translation target rate of inflation. affect. other out, ofch course, because you're looking at the overall index. if you diss aggregate, services when you look at what is happening at the moment, you try prices in the index are much more reflective domestic lead to step back and take a rational generated inflation. view of it all. that is running faster than 2%. is it the oil market? you might expect services prices to rise. it is still a reminder that this very low energy prices we are seeing at the moment. is not an environment to which when you look at the top 10 list there is no inflation.
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of things, what are you working you just have to dig below the through? surface. what stands out? .> emerging markets concepcion, there is a lot of inflation. guy: we have been through a long period where wage earners have the state owned enterprises. lost out. i think we will find a number of are we going to start to flip is around? richard: when labor markets are hours i think we will see real loose as they were after the problems. guy: we're back at levels last recession, that is a period when you see corporate gain share of .een the back end of the 90's income, because they can expand their margins. are we there again? >> i think it ready looks pretty they do not have to pay much for tough now. it. a labor markets tighten, that equation changes. labor becomes scarce. maneuver left. it can charge more for itself. they are countries that are that is the phase we are beginning to come into now in the u.s. and u.k. closely tied to the business we are not there in europe. you'd i think we will see a problem in emerging markets. caroline: what about china? we're starting to see the employed labor force, a greater
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we have a columnist who is quite share of national income. buoyant that this might kick up these things don't change your medically that is the phase we the economy and help the world are in now. economy in the future. do you anticipate all could this help them grow at a faster pace? >> china is in a much better fair? place than many of the other asian economies. jamie: if the wage is going to there's still the potential of a stimulation there. chance, then they will change their mind. on the global inflation thing, we are in the midst of a global i think china comes out of this looking relatively better at the moment. surprised shock. is that the place i want to that will not last. couple used online, it will be hide? everything needs some dollar in it? back as usual. many firms are cash sitting caroline: always good to get your perspective. richard jeffrey, joyful to have there. you on too. guy: mr. ferro is here to tell us what to expect. think the green squeeze to do that -- they will find the green jonathan: china data front and squeeze to do that. center.
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once again, a two-day plunge for the chinese currency. that leverage strives local a report that they are growth so often. decline.ng to stop the he will be sticking getting worse on the onshore around for us. needing debt release and market. we'll have a chat about that. the full clip for everyone. you see the stock impact that talks with creditors. the oils poses to the minors. let's find out what is going on. deflation echo the ukraine finance minister is what does that mean for bonds? we will talk about that. heading to san francisco today. why? we also need to talk about her way to san regional specific, 1998, 1997. those two years getting thrown francisco because she says this around this morning. is creditors last opportunity folks on the malaysian ringgit. for a deal. we'll talk after the break. managerse biggest fund caroline: phenomenal news about in the world. the ring it. thank you very much indeed. tomorrow, will the chinese she is going to talk to the creditors, which will be led by do it all over again? ♪ templeton. that is not the only unusual thing about this debt
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restructuring talk. the second base holder is of russia. they want be at the talks. they don't consider themselves to be live it creditors. they describe themselves as official creditors to ukraine. these talks have been going on for almost forever. the talks have been no less interesting and no less divisive . ukrainians have made it clear they would like to see the 40% haircut. creditors have suggested they're prepared for some more like 5% plus extending out that the charities and perhaps trimming coupons. this is a complex. caroline: a compact deal? how likely is it? ryan: both have quite a bit to lose in this case.
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sayingthe firms has been there is effectively a two in three chance of a deal. ukraineon for that is needs a deal. that money from the imf is contingent on ukraine finding savings from creditors over the next several years. fell by over 60% in the first half of the year, they were forecasting a traction of 9% by the end of the year. they are seeing inflation would be around 46% at the end of the year. there is a conflict that is raging. couldeditors know they lose on that as well. -- he told creditors
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if you don't do a deal here, ukraine maybe force introduce a moratorium on debt. if you want any money, you .etter do a deal with us now they certainly don't want to default on their debt. that would be a major problem for the country. you very much. ryan chilcote joining us from moscow. caroline: alibaba. and a former stock market darling. we look ahead to those numbers. ♪
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jonathan: good morning and welcome to "on the move" right here in the city of london. yuan tamtrum, day to, the drops further. greek agreement hits a german turbulence. up bailout risks being held by german lawmakers.
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u.k. jobs day, onyx clement -- unemployment expected to stay at 5.6%. i will break it down for you ahead of that. downconds away, futures and futures lower. points.res down 122 a lot ot talk about caroline hyde has your european market open. caroline: we will see how they open. we expect them to trade lower a second day down they go. the biggest move in the yuan in 21 years. seeing devaluation, the market getting more of a say in whether currency goes. the emerging markets give it the thumbs down. it is a selloff, europe sells
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off, cap 40 up by .9%. we will see -- greece opened at half past the hour. germany guy: 6:44 a.m. in london. a 7:44 a.m. in paris. caroline: china reduce the daily fixings for the yuan.
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the record cut by 1.9% in yesterday. they want to get the market more say in determining the exchange rate. currencies lighting as well. 20% down. hillary clinton has directed her eight to hand over her private e-mail server to the justice department. and also a thumb drive that contains copies of her e-mails. guy: google has a corporate restructuring.
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here is what some of our guests had to say. i don't think there is a company that is capable when it comes to ambitious, new areas. i don't think we're going to see anything like this. they have the folks ability to hire people. google.separate from it has allowed flexibility. from one -- caroline: from one tech giant to another. it has been a difficult year. now at its lowest since it's ipo last year. can alibaba stage a comeback?
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how has alibaba performed? we are expecting sales to slow. $90 billion? >> ees, exactly. it is the largest wipeout -- yes, exactly. it is the largest wipeout. in terms of the reasons, it is a combination of market, economy, and slowdown. they had a government dispute earlier this year. they are also funny at harder to attract new customers. they need to branch out. medial are they thinking? they have a basket of strategies going forward. they are extremely bullish.
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that is the second-biggest return. ,n terms of specific strategies jack ma has personally said he wants to build a network that could spare packages between 1000 -- in the next few years. tap intong able to household appliances and its vast network for deliberate would be a boost alibaba. -- for delivering with a boost for alibaba. caroline: this quarter, what should we be looking for in the earnings? definitely. also, money generated from this sector.
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it has hit earnings in the past three quarters. also, the revenue from overseas contribution. that is something they have been highlighting as well. caroline: thank you very much. the top story.o here is my guess have been saying about the currency moves. uests have been saying about the currency moves. >> i don't think this was the only reason. the imf factor is important. china really wants to get this thing right through the basket. i'm sure they pay attention to the factors. >> they claim it is a one-off. i doubt it.
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>> china is at a massive disadvantage. it is not something to worry about. it is not something to say there were going backwards in any way. move.a risk off is a testament to some concern around the global growth picture. the export data is making a move on the currency. there is a lot of ramifications. what is the saying about global growth? there are a few things to watch. how will that impact demand?
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now.nal for at the same time, china would .ave to sell treasuries as well >> there is mounting. countries from japan, mexico come even europe have to suffer the consequences. ok. you have likened up -- lightened up enough? how is it working out? see think we might
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translation through u.s. companies and europe for some of the exporters. i think we have dodged that bullet. caroline: where have you been putting your money? be looking? people where could they look in terms of stock? italy.ink we like there is a recovery going on. germany going through an internal evaluation. the euro is still in business. i think it will have to try to stimulate its economy. guy: walk us through the logic. i get the numbers.
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white a phenomenal move. -- quite a phenomenal move. >> it is a sector everyone likes to hear. they tell you the economy is improving now. that is the main thing. i think italy's quietly getting on. an absolute terms, it is an appalling recovery. and curious. there isme of them -- growth isme sluggish. better than some other economy
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.s it is quietly getting about. caroline: it is not reforming as quickly as we would like to see. they want their workers to work longer. >> france really is though one disappointment. it hasn't made the reform. it hasn't been as bad as you make of it. they're not making the reforms that germany would like. i think it needs to now. this. was fascinated i inn you saw what happened the media sector and the pummeling that has been happening, did you worry about this? think youuse you to may want to line up?
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worrying. it is a bit worrying. it has gone about it much the same way. i think it would make sense. there is a structure going on in telecom. they get content. it will play a part in whatever restructuring happens. caroline: u.k. growth in terms of -- how much do you think money will flow once again? >> i think it makes it more expensive for chinese banks. devaluation, you
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probably have merck -- more urgency to get money out of china. guy: that is what i am increasingly hearing. >> i think we will see some moves in that, yes. we will try to anticipate where the currency is going. they u.k. economy has in pretty good. it is a look like it has ended yet. see quite where it is coming from. guy: he will be back with you shortly. plenty coming up on the u.k. and implement data later. caroline: coming up on
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"countdown" yuan's biggest drop since 1994. we break down the winners. ♪ ♪
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guy: devaluations, day two. the chinese central market desks chinese central bank gives the markets say. caroline: safety in the dollar. guy: resales data makes estimates. ♪ welcome to "countdown." i am guy johnson. i am caroline hyde. today, china dominating the market. the repercussions we see throughout the dominating markets -- drought the emerging markets.
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for the second day we have seen huge moves. having an impact on where the currency is going. guy: you look at the impact as it ripples through, absolutely fascinating. it is taken it to levels we have not seen in quite a time. this is the age and the -- this isrisis where we are. very similar levels. at this point, and greenspan was taking action. he was trying to make sure it did not effect the global economy. we got janet yellen talking about raising rates at some point. it is interesting to see these two levels. caroline: you got barclays, standard chartered talking about currents -- talking about foreign currency. emerging markets, you got russia, south africa being
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pounced by china, their biggest trade partner. guy: we had a big move by the chinese today. we have data we need to take you through. how the asian markets high responding -- how the asian markets are responding. >> good morning. the big story, china did day to of china cutting the value of the yuan by 1.6%. intervention.this today we are hearing from sources that the bank has to intervene in the onshore market through asian banks. to prevent the yuan from dropping. the currency already down more than 1.8%. that would be a four-year low. the onshore yuan can decline 6.4572.low as around
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look at the offshore, currently what it is doing right now. it is tumbling down more than 2.7%. if you look at the historical context. if you look at the two-year chart. a shark sunk right there. we have chinese factory data showing that it grew 6%. missing estimates. also slowing from the previous month. a retail sales also missing estimates only going 10.5%. that is going to spark more fears that we could see a sharper slowdown in china. all of this affecting stocks. china's move sparking fears of a currency war. asian stocks falling across the
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board. you saw the shanghai composite rebounding slightly. it has been negative all morning. the benchmark index for the region heading for its lowest close since january. in japan, energy shares led to game. down 1.5%. two straight days for of losses for japan -- two straight days of losses for japan. theyam down 1%, because wanted to allow the currency to weaken after china devalued the yuan. caroline: we are good to sit with this china think it we've got a can news out of the united kingdom. as expected, selling the economist with 50% stake going to axle. that is slightly more.
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guy: benchmark expectations for what that state was worth. it was expected that this would be. ways now working its through the media rising itself. that is what the media is focused on. the financial media certainly at the moment. china central bank blowing -- china central bank lowering the yuan. what are they up to? about update -- nick, talk us through day to. what is the strategy? nick: this central bank is not one that defines itself by its transparency. anyone that tells you they know what the strategy is is probably line. it looks like they are continuing with what they say is
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getting the market a greater role. when they announced the devaluation yesterday. when they said the yuan was out of whack with market expectations. today, it appears to be aligning the yuan. however, as we discussed, china -- we have learned that china is intervening to keep the yuan from falling below 6.43. sort of a contradictory message. on the one hand saying we are going to get the market a greater role. but we are not going to let the yuan get too low for comfort. caroline: hallowell they go? -- how low will they go? could we see several days of this continuing? nick: there's made it clear that they see the yuan being stable within a certain range. they have not given up that ban. when they intervene at 6.43,
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that is really what is going on. they don't want it to hit the edge of that trading ban. the pbs he is sending the yuan willat the stabilize. it has plenty way to go. way left tobe some run on the devaluation. implication are what? people are still grappling with an understanding with how this is going to affect the asian region. they: -- nick: it is difficult to overstate the impact. when the world's second biggest -- gold is up.is there seems to be a flight safety.
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capital outflow, those are expected to increase. you mentioned the ringgit. as exports increase, that will have an impact on commodities. the bloomberg commodity index is down today. the ripple affects cannot be overstated. the imf did say this was potentially a good move for china to get wider use of the yuan. make it more of a global currency. if you're looking at chinese exports, it is likely exports will be cheaper from now on. there will be affects. some of them good and bad. nick, thank you very much indeed. what the repercussions could be for the emerging markets, following the huge move. got does entering a bear market. guy: elliott goggin with all of the details.
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elliott: through emerging markets, stock markets. there will be repercussions everywhere. the emerging markets -- there are a few reasons why. if you are an emerging market, and you look to china, then you're going to get a hit, because chinese consumers are defined your products expensive. they're going to be less inclined to buy them. if you're an exporter in general, not necessarily to china, you've got a tougher , because china's exports are more competitive. if you're a commodity exporter, cheers -- fears about china, china is going to be consuming less, then you're going to get a whack as well. if you check all three of those boxes, you could find yourself in trouble as a result of this yuan devaluation. guy: what is more important, the fed or the chinese?
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is having a bigger impact -- having a bigger impact on the emerging markets? focusing.he market is there are people out there who think the fed is going to raise rates. maybe what is going on in china will filter into the fed's mindset and decision-making process. it is all mixed in. even the emerging markets are under pressure anyway in anticipation of the fed's raising rates. money going out of the emerging markets and coming back in. to quitexacerbating dramatic effects. guy: elliott geoghan. that takes us to our twitter question of the day. currency, your problem. it's china exporting its problems to the rest of the world? -- is china exporting its
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problems to the rest of the world? get the managing director. cheering the pboc on. fundamentally a good thing when it comes to an opening up of the markets? we had a guest who said it is growing pains or slowing pains of china. this is a country coming of age. i think it is healthy if china could rebalance its economy. i think all of that is encouraging. guy: this isn't going to be that though, is it? this is a mercantile story. this is not about propping up the chinese consumer. if you wanted to do that, you have a summer currency so they could spend lots of money. colin: i would agree.
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i think also the fact that the metals have collapsed suggest thinkhinese growth -- i i think banks -- have to be worse than what we are seeing -- i think things have to be worse than what we are seeing. stand in where do you terms of commodity rout. we have more and more to go? colin: i think there are some more oil to go. not only the u.s. shale producers, but they have to pump hard to get themselves back on the horse. we're going to see continued production. i don't see a bounce in the commodities coming soon. caroline: thank you very much. guy: it is 7:12 in london.
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we are minutes away from the european equities market open. what their value is telling us right now. this is the number you're looking at. ftse 100 down 7/10 of 1%. german mistere market. germany is heavily exposed to global trade. it is heavily exposed to china. at the epicenter of the european story this morning. b&wline: those big moves in -- big moves in bmw. we're going to continue to see the effects in europe. guy: but the more coming up on "countdown." it is 13 minutes past 7:00 in london. ♪
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